Bankruptcy sometimes seems like the only way out. Like death to a weary body, this would seem like a well-deserved release after a huge and emotionally draining battle to stay afloat financially. There may be a point sometimes when you might say, "Oh, what the heck – I cannot do it anymore!" and choose to declare bankruptcy instead of trying to balance your finances any further.

1. You CAN Do It!

First of all, you need to believe that you can do it. Look around you – people who are successful millionaires always believed that they could overcome the worst. No matter how many times they failed, they picked themselves up and started again with the full conviction that they can achieve what they set out to do.

For example, consider Abraham Lincoln from the past and Warren Buffet and Donald Trump from the today’s world. They suffered terrible failures in their respective lives, but kept on walking on the path they chose. They never faltered in their belief that they can.

2. Earn More Rather Than Cut Expenses

The first advice that any credit repair agent or counseling service will give is to cut down on frivolous expenses. While this is exceptionally sound advice that needs indeed to be followed, it is also very difficult to apply.

Cutting down expenses involves a drastic change in your lifestyle, which is often more difficult than it seems. This is why most people are unable to stay on the budget they envisage for credit repair tasks.

It's better to apply your efforts to increase your income. This is definitely not hard. You can always use 2-3 hours that you would have otherwise used unproductively, to work a little extra and complement your income. Increasing your income is better than cutting down costs as this will boost your morale; living on a austere budget on the other hand will send most people into depression.

3. Continuously re-negotiate loans

A vital secret in staying afloat in the credit world is to keep seeking ways to cut down your interest payments and liabilities. Research constantly and re-negotiate immediately with your creditor when you find that the market offers lower interest rates than you are paying.

Do not hesitate to shift your account to a credit provider that offers better terms. Even if it's a difference of 0.5% - this will add up to a tidy sum when the payments span over 2-3 decades. Ensure that your credit cards are always paid in full as these will be the payment with the highest interest rates.

Do not use credit cards unless there is a dire emergency; even so, when the bill is presented pay it in full. Make it a habit to use debit cards instead of credit cards – in this way you will not risk over-spending and highest interest rate loans.

If you take care of these three steps, you would find that your financial position is not that bad. Bankruptcy is always a bad idea since it will brand you negatively for more than a decade. This “relief” comes costly. Avoid it as best as you can!

My mother always said, ‘Whatever happens happens for good’ whenever I told her I had a bad experience. I often felt that she never really empathized with me because of this standard retort. However, I realized how much wisdom this saying carried after I was defrauded by a scam credit repair agency. I learnt some very valuable lessons from that experience and I want to share these with you:

1. Be aware of the facts – I read ‘let us increase your score in one week’ and I signed for the program without realizing that this was legally impossible. Now, I know that there is no way on earth that anyone could improve your score legally within a week. I am also aware of many facts about credit repair because I researched and studied after I was cheated.

2. Advertisements lie – just because it is flashing in red and yellow lights and is worded smartly, does not mean it is true. Most scam organizations pay heavy money on advertisements that are extremely attractively worded to capture your attention and convince you that what they sell is real. When you see such an advertisement 5 times a day, you start believing that what it says is true. It is not. Sign up for any services based upon cold facts not colorful lies.

3. Upfront fees means fraud – there is no exception to this rule. If the company asks you their fees upfront no matter what the pretext is, the company is fraud. The law demands that an accredited credit repair agency offers you a contract with clear-cut deliverables against the proposed fee. You will have three days to back off or change your mind if you find anything in the contract unsuitable. The fees are always due after the delivery of the services listed in the contract.

4. Bankruptcy cannot be wiped off – 11 years; that is the time span you would have this decision haunt you on your credit report. While it is possible to increase your credit score by concerted and highly focused efforts, you cannot wipe off the bankruptcy entry from your credit report before the standard period has elapsed.

5. Quick fix of credit score means more trouble – credit repair cannot be repaired with quick fix solutions. If you are offered ‘amazing’ solutions, watch out for more trouble because you are on the path of head-on collision with the law. All quick fix solutions in credit repair are either false or illegal. Do not fall into such traps. You will end up buying more trouble.

6. When you are looking for credit repair, you need counseling as much as professional advice – when you reached the crossroads where you have to get professional help to increase your credit score, know that you also need counseling. Financial mismanagement is like an addiction that very rarely can disappear without counseling and external help. Be humble enough to recognize and accept such help.